Aptinyx Inc. (APTX) CEO Andy Kidd on Q2 2022 Results - Earnings Call Transcript

Aug. 07, 2022 7:13 AM ETAptinyx Inc. (APTX)
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Aptinyx Inc. (NASDAQ:APTX) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET

Company Participants

Patrick Flavin - Senior Manager, Corporate Development & Investor Relations

Andy Kidd - President & Chief Executive Officer

Ashish Khanna - Chief Financial Officer & Chief Business Officer

Kathryn King - Senior Vice President, Clinical & CMC Operations

Conference Call Participants

Ritu Baral - Cowen

Evan Hua - BMO Capital Markets

Myles Minter - William Blair

Boobalan Pachaiyappan - H.C. Wainwright

Operator

Good afternoon and welcome to the Aptinyx Second Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call to your questions. Please be advised this call is being recorded at the company's request.

At this time I would like to turn the call over to Mr. Patrick Flavin, Senior Manager of Corporate Development and Investor Relations at Aptinyx. Patrick, please go ahead.

Patrick Flavin

Thanks, Kelly, and good afternoon, everyone. Thank you for joining us on today's conference call to discuss Aptinyx's second quarter 2022 financial and operating results. We invite you to visit the Investors section of the Aptinyx website to view our press release describing financial results and business highlights from the second quarter of 2022.

On today's call Andy Kidd, our President and Chief Executive Officer will discuss our business and clinical development progress. Then Ashish Khanna, our Chief Financial Officer and Chief Business Officer will review our financial results. In addition Kathryn King, Senior Vice President of Clinical and CMC Operations; and Harald Murck, Vice President of Clinical & Medical Affairs are on the line for the Q&A portion of the call.

I would like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially.

Any forward-looking statements are made only as of today and we disclaim any obligation to update these forward-looking statements. Please see the forward-looking statements disclaimer in our financial results release issued this afternoon and the risk factors in the company's current and subsequent filings with the SEC.

It's now my pleasure to turn the call over to Andy.

Andy Kidd

Thanks Pat. Good afternoon everyone and thank you for joining us on today's call. I'm happy to say that despite our disappointing data readout for NYX-2925 in DPN in April, we've otherwise made great progress over the past few months and are well-positioned to deliver several major milestones from our pipeline of NMDA receptor modulators.

First of these is the data set from our Phase IIb study of NYX-2925 in patients with fibromyalgia, which we expect to receive and communicate later this month. We're also pleased to announce that we've recently been able to close new patient screening in our Phase II study of NYX-458 in cognitive impairment associated with Parkinson's disease and we therefore, expect to complete enrollment in the next few weeks. As a result we're on track to report data from this study in the first quarter of 2023.

In addition we continued to make progress with our Phase IIb study of NYX-783 in patients with PTSD and we remain on track for data readout in the second half of 2023.

As a reminder this study is assessing the 50-milligram QD dose level of NYX-783 with the study of the 150-milligram QD dose level having been paused last quarter following the DPN readout.

I'm also very excited to share that NYX-783 will soon begin a Phase I study for the treatment of opioid use disorder or OUD. This study is enabled by a multimillion-dollar grant awarded to researchers at Yale University School of Medicine, who's demonstrated the potential of NYX-783 in preclinical studies and we'll be conducting the Phase I study.

The grant is sponsored by the NIH and administered by the National Institute on Drug Abuse or NIDA. This funding for the development program enables us to partner with world-class researchers and expand the therapeutic potential of NYX-783 in a new indication, all through non-dilutive financing that preserves our cash runway. With strong progress across our pipeline, we're fortunate that our current balance sheet can enable data readouts from all of our ongoing studies.

Let's discuss our pipeline programs in more detail, beginning with NYX-2925 in fibromyalgia. As I mentioned, we plan to receive and communicate data from our Phase IIb study of NYX-2925 in patients with fibromyalgia later in August.

As a reminder, this follows the promising effect seen in our prior Phase IIa neuroimaging study in fibromyalgia that we read out in 2019. These prior data as well as several differences in the underlying biology between fibromyalgia and DPN provide a basis for optimism as we approach the data readout.

Since fibromyalgia is a multifaceted centralized pain disorder, we've designed the study to incorporate some exploratory features. We're testing multiple dose levels of NYX-2925 50 milligrams QD and 100 milligrams QD and are evaluating patients across a variety of symptom endpoints related to pain severity, fatigue levels, sleep quality, and impact on daily function.

That said, we've also based the design of the study on what we believe will be the requirements for a pivotal trial so that it can be as informative as possible. This is a 12-week randomized placebo-controlled double-blind study and we're testing NYX-2925 as a monotherapy with no concomitant analgesics.

The primary endpoint is the change from baseline to week 12 in patient-reported average daily pain, averaged over a week and evaluated using the zero to 10 numeric rating scale or NRS.

Study is powered to detect an effect size that's clinically meaningful. Depending on what the exact degree of variation seen in pain score differences, the lower band of what's needed to achieve statistical significance will be approximately a 0.5 difference between NYX-2925 and placebo on the NRS.

Next steps following the completion of this study would include an end of Phase II meeting with FDA to discuss requirements for Phase III NMDA. We expect a positive data in this study would unlock significant value for Aptinyx. We believe that a well-tolerated therapy with a novel mechanism of action such as NYX-2925 represents a multibillion-dollar commercial opportunity in the US alone, with 50% to 70% of diagnosed patients, discontinuing existing approved therapies after just one year, due to tolerability issues and the lack of sustained efficacy.

As we previously mentioned, this opportunity is driven by substantial patient volume and unmet need, rather than by price. Given the enormity of the treatment landscape, we've long believed, that a larger commercial partner would add meaningful value in maximizing the reach of an approved therapy. This is an avenue we will certainly consider for our program, under the right circumstances. I'd like to thank all Aptinyx colleagues and partners for their hard work and dedication to bringing this study to completion. We look forward to receiving the results and communicating them very soon.

Let's move on to NYX-458 in Phase II development for the treatment of cognitive impairment in Parkinson's disease and dementia with Lewy body. I'm very pleased with the progress made over the past several months in this study. We've remained focused on execution and have recently been able to stop screening new patients with sufficient patients already in the screening pipeline at our sites to meet our enrollment goal. We therefore expect to complete enrollment in the next few weeks, as these last patients complete screening and we're on track to report data from this study in the first quarter of 2023.

You may recall that the study's population was expanded from mild cognitive impairment associated with Parkinson's disease to also encompass mild dementia in Parkinson's disease, as well as dementia with Lewy body. As enrollment nears completion, it's not clear, that the majority of patients in the study will have a diagnosis of mild cognitive impairment or dementia associated with Parkinson's disease and there will be relatively fewer patients with dementia with Lewy body. These differences reflect screening activity and therefore the availability of suitable subjects within these diagnostic groups at our study sites. We're very comfortable that the patient population we've enrolled will enable a robust readout.

Although this is an exploratory Phase II study, we've applied a well-controlled design with the potential to generate strong proof of concept data. The study is randomized placebo-controlled and double-blinded, which will enable us to characterize the therapeutic benefit of NYX-458 accurately. We expect final enrollment of approximately 100 patients across two group's placebo and 30 milligrams QD of NYX-458, with a treatment period of 12 weeks.

In addition to evaluating the safety and tolerability of NYX-458 in patients, the study employed well-validated tablet-based neurocognitive assessments to evaluate effects across key cognitive domains, including attention, memory and executive function. While this current study focuses on Parkinson's disease, we believe that positive data would unlock the opportunity to further develop NYX-458 across other cognitive impairment conditions. We look forward to sharing more updates in the coming months, as the study moves toward completion ahead of the expected readout in Q1, 2023.

Finally, let's move on to NYX-783. NYX-783 is currently being evaluated in a Phase IIb study in patients with posttraumatic stress disorder. The study which kicked off towards the end of last year is evaluating 50 milligrams of NYX-783 QD versus placebo in approximately 300 PTSD patients over 10 weeks of treatment. As a reminder, our similar study looking at 150 milligrams QD was placed on a temporary pause prior to the start of its enrollment in order to extend our cash runway, following our DPN data readout in April. We remain committed to recommencing this study, when is operationally and financially feasible to do so.

Following the initiation of the Phase IIb study for the 50-milligram dose in December, our team has worked diligently to bring the study sites online and begin enrolling patients. Despite an increase in clinical development activity in PTSD across the industry, which has increased competition for sites and patients, we've seen steady progress over the past few months and we remain on track to report data from the study in the second half of 2023.

In addition, as I mentioned at the beginning of the call, we're very excited that the FDA recently cleared our IND application to allow for the evaluation of NYX-783 in patients with opioid use disorder or OUD. This IND is a testament to the productive partnership Aptinyx has enjoyed with a world-class team of researchers at Yale University School of Medicine, which spearheaded an impressive preclinical development effort, building on our work in extinction learning in PTSD and alcohol use disorder. The Yale team has generated compelling preclinical data, supporting the hypothesis that the extinction learning mechanism underlying NYX-783 may provide a safe and effective treatment for OUD.

In their studies, NYX-783 showed positive effects, combined with a strong safety profile and models of addiction utilizing oxycodone. The preclinical data set was generated with the support of a multimillion dollar grant under the NIH helping to end addiction long-term or heal initiatives. Based on the preclinical evidence, our research collaborators at Yale recently received preliminary approval by the NIH and NIA to transition to clinical stage development, starting with a Phase I study of NYX-783 in people who use opioids to begin later this year.

Opioid use disorder represents a significant public health issues facing society today. In this Phase I study in OUD will be a critical first step to evaluating NYX-783 potential for treating. We look forward to sharing more detailed updates on this program later in the year as the clinical stage grant funding is formally announced and the Phase I study is initiated.

I'll now hand over to Ashish to review our quarterly financials.

Ashish Khanna

Thanks Andy. Beginning with the balance sheet. We ended the second quarter of 2022 with $85.3 million in cash and cash equivalents compared to $106.1 million at the end of 2021. We expect this existing cash balance will support operating runway into 2024 and can enable data readouts from each of our ongoing clinical development programs.

As Andy mentioned earlier, we also do not anticipate the upcoming Phase I study of NYX-783 in OUD to impact our cash burn as the clinical study will be conducted by the team at Yale and funded by the generous grant from NIDA. The majority of our spend during the quarter centered around research and development related to our ongoing clinical studies.

R&D expenses were $11.9 million for the second quarter of 2022 compared to $14.8 million for the same period in 2021. The decrease in R&D expenses was primarily driven by the completion of enrollment in our Phase IIb studies of NYX-2925 in both DPN and fibromyalgia. We reported G&A expenses of $5.2 million for the second quarter of 2022 compared to $5.1 million for the same period in 2021. Finally, our net loss for the second quarter of 2022 was $17.7 million compared to a net loss of $19.8 million for the same period in 2021.

I'll now turn the call back over to Andy.

Andy Kidd

Thanks Ashish. We're very happy with our progress in the last quarter, despite the disappointment of DPN. Our team has shown incredible dedication to bring each of our clinical studies closer to the finish line and we're poised for two major Phase II readouts in the very near future supported by a strong balance sheet.

We are happy to begin taking your questions now.

Question-and-Answer Session

Operator

[Operator Instructions] We'll move first today to Marc Goodman with SVB Securities.

Q – Unidentified Analyst

Thank you for taking question. This is Rudy on the line for Marc. For the upcoming fibromyalgia data, can you remind us what are your current expectations for the baseline pain score and the change from baseline for both NYX-2925 and placebo? Thanks.

Andy Kidd

Yes. Thank you. So, I think it's difficult to be too specific as we know from the variation that we see in different pain studies. We I think have talked prior to DPN about wanting to see baseline pain scores that were at least in the mid-single digits. And I think in our DPN study they were a little over six. And so, I think our expectations in fibro were similar.

And then again with respect to changes from baseline, those do vary from study to study and indication to indication. I think the most important point is the one that we mentioned in the remarks which is in order to be clinically meaningful -- and it does depend a little bit on other factors like the safety and tolerability and obviously the variation seen. But as we mentioned, we are hoping to see a separation between NYX-2925 and placebo of around 0.5 points or higher on NRS.

Q – Unidentified Analyst

Got it. So -- and regarding following steps you mentioned you're going to have the Phase II meeting with FDA first. But can you provide more granular timing? Are you expecting starting another trial by the end of the year or into next year?

Andy Kidd

Yes, good question. I think starting the next trial would be into next year. Our expectations for the timing of the meeting with FDA that we will move as quickly as we can, but it depends a little bit on the timing from the agency side and I think that we are certainly not expecting to start the next study this year. That would be into 2023.

Q – Unidentified Analyst

Got it. Thank you.

Andy Kidd

Thank you.

Operator

We'll hear next from Ritu Baral with Cowen.

Ritu Baral

Good afternoon, guys. Can you hear me okay?

Andy Kidd

Yes.

Ritu Baral

Okay. Thanks for taking the question. I wanted to ask about how standard deviation or variance for pain scores in fibromyalgia might differ from DPN? Just wondering about assumptions wondering about what expected placebo response might be for this indication versus DPN as well?

Andy Kidd

Yes. Thanks Ritu. So, a good question. As you probably know there have been a range of studies done in these indications and there is a good amount of variation from study to study. One of the things that I can say is we do -- in this study as in the last one, we do apply some screening to the patients beforehand in terms of their pain score reporting and then we also train patients in terms of accurate pain score reporting once they are in the study.

So we have done a few things that we try to minimize the variance of the pain scores. There's I don't think a consistent evidence that's markedly different between fibromyalgia DPN and other pain indications. So, we have taken similar steps to try to manage it. And then I think it's a similar story with placebo response. There is some evidence from meta analysis that have been done and published that might suggest in some cases fibro studies have seen a little bit of a lower placebo effect. But I think importantly, we're not putting too much weight on that but that is something that has been published.

Ritu Baral

Got it. That's helpful. And can you talk a little bit about 783 site activation and enrollment how that's going?

Andy Kidd

Yes. I think as I said it's certainly – we've certainly seen some increase in industry activity overall in PTSD. And as I mentioned that has led to more competition for sites and for subjects. But I think that we've managed to work through a lot of that over the last few months and so I think our feeling now is that you never know what will happen in the future with factors that drive enrollment. But I think like I said right now, we feel reasonably comfortable with the time lines for the study. But certainly I think the process of identifying and activating sites has been definitely affected by the fact that there is a lot of industry activity going on. I think we've heard that – we've heard that from quite a few people. Like I said I think we're comfortable with where we are now.

Ritu Baral

Got it. Great. Thanks for taking the questions.

Andy Kidd

Thank you.

Operator

We'll move next to Joon Lee with Truist Securities.

Unidentified Analyst

Good afternoon. This is Asim [ph] on for Joon. Thanks for taking the questions. So now that Phase IIb results for DPN are known, how do you think that might influence placebo response in the upcoming FM trial? And my second question is, if you could comment on the impact of the NIH funding on your plans for 783? And if you anticipate further grants? Thank you.

Andy Kidd

Yes. Thank you. Good question. So I think for DPN, we wouldn't imagine there'd be much influence. In terms of the timing we had already completed enrollment in the fibromyalgia study by the time the DPN data were made public. And it would only have been a very small number of patients that were still kind of in treatment and a lot of them would be quite far through. So I don't think there's likely to be much influence there.

With respect to 783 and NIH funding, I think we will be able to talk a little bit more about that once as I mentioned it's formally announced. But I do think we – there is a cost for funding the Phase I study and potentially some next steps beyond that. I think we look on this as really a good way for us, particularly at this time now, where we're trying to maximize our cash runway to really create a whole new program.

And I think in disorder where as I mentioned there's substantial unmet need. And I think on top of that to be working with the researchers at Yale University School of Medicine, who have tremendous experience and a great background in study in opioid use disorder which as you can imagine there are some complexities to studying we're very excited about it. So yes, I think it's the Phase I study and potentially as well some next steps after that.

Unidentified Analyst

Thank you and congrats on the progress.

Andy Kidd

Thank you.

Operator

We'll hear next from Gary Nachman with BMO Capital Markets.

Evan Hua

Hi. This is Evan Hua on for Gary Nachman. Thanks for taking my questions. Yes my first question for NYX-783, what are some of the exclusion criteria in the trial that could help manage the potential variance in the patient population? And then secondly for 2925, can you just talk about your confidence level to be able to hit the primary and secondary endpoints in the fibromyalgia study? Thanks.

Andy Kidd

Thank you. Well so for 783 in terms of exclusion criteria variance, I think in general terms there's – as there was in the last study, obviously we're looking for a certain extent of symptom severity. So trying to exclude, particularly the patients with milder symptoms that are closer to a floor effect. There's a few other things that we have put in there. But I'd say for the most part we have also tried to make sure that this is a representative patient population, which is quite important in this case because there really isn't a strong biological basis for segmenting that population and so we have a range of different types of trauma and so on.

I think we've also mentioned one of the things we noticed in the last study that we published was to do with an association with Kinetisense [ph] trauma and so that is something that we are very mindful of. We're not excluding patients for the longer time since trauma but we are taking steps to make sure that we have a good balance of patients for a shorter time [ph] of trauma as well.

So yes there's a few things. But I think a lot of the variance actually comes not so much from exclusion criteria, although that plays a role. A lot of what we're focused on with variance is the quality of the data that is collected by the site. As you may recall, the primary endpoint is the CAPS-5 scale for the clinician assessment of PTSD symptoms aligned with the DSM-5. And so we're putting a lot of effort into making sure that we have a relatively limited number of sites with very well-trained raters and limited numbers of raters particularly to do with the training and the quality of the data and then surveillance of that.

So I think a lot of it really is more there. It's making sure that this is a scale where we want to make sure that the quality of data we will get from that is as high as possible. And, therefore, any variances if to do with true underlying differences in symptoms and not differences in raters and methodology and so on.

With respect to the second question, like, I said I think we're optimistic about the study. There's a lot of differences biologically between DPN and fibro. I think fibromyalgia is classified as the nociplastic pain condition at centralized pain stage. We know that DPN is a peripheral neuropathy. We have all, of course, been aware of those differences. But I think also as I mentioned this builds on the neuroimaging study that we published in -- that we disclosed the data from in 2019 that showed neuroimaging biomarkers improved in fibromyalgia with NYX-2925. And in that study we also saw some improvement in some of the other symptoms like fatigue and so on. So I think we're always cautious ahead of the readout. But I do think as we usually are, we are cautiously optimistic because of those differences and some of the underlying data that is building up.

Evan Hua

Great. Thanks.

Operator

[Operator Instructions] We'll hear now from Myles Minter with William Blair.

Myles Minter

Hi. Thanks for the questions. On the fibromyalgia study, can you just remind us of the stat hierarchy here? Are you testing the 100-milligram dose versus placebo before the 50 mg versus placebo? And on that 100 milligram, can you remind us how that actually performed in the neuroimaging study relative to the 50-milligram dose? I'm blanking on the doses that you tested in your prior study. So I apologize for the naivety here.

Andy Kidd

Yeah, no problem Myles. Thank you. So in terms of the hierarchy, I think we've mentioned before that one of the aspects of the study that is more exploratory. And in many ways, it's a very robust and as I mentioned pivotal design study. But one of the more exploratory aspects was the dosing, and so we are not testing the doses hierarchically. We're testing both independently.

And in the prior study that you referred to, we tested two doses 20 milligrams and 200 milligrams. And we saw biomarker effects of both doses and what appeared to be a stronger clinical effect with the 200-milligram dose, although that interpretation was complicated by the fact that they were administered sequentially. So by the time the patients have finished two weeks, 200 milligrams they've been on drug for four weeks versus with the 20-milligram they've been on drug for two weeks. And so we worked with our collaborators on interpreting the data. And we felt as though testing the two doses in the middle 50 milligrams to 100 milligrams was the best approach. And so that -- neither of those two doses was tested in neuroimaging study but dose of either side of that showed effect on the neuroimaging markers.

Myles Minter

Okay. Thanks for that. And then just on the Phase I study that's being proposed by your friends at Yale there. I guess, what are the goals of that study? And why is it a Phase I study when theoretically you've already done that for 783, so you kind of know the safety is that are we going to get some dose selection out of that study that a future grant might fund in a later-stage trial, or I guess what are your outcomes coming out of that? Thanks.

Andy Kidd

Yeah. Thanks Myles. So Kathryn is here. I'm going to have her answer that question.

Kathryn King

Yeah. Thanks Andy. So this is a different Phase I trial than the single ascending and multiple ascending dose that we've already done with 783. This is a direct drug-drug interaction with oxycodone looking at safety tolerability and PK of those two compounds together.

Myles Minter

Do you have any like direct head-to-head data in preclinical models against naloxone, how it sort of comps up against that?

Andy Kidd

Well, it's a difference mechanism of action and really a different -- conceptually a different thing than naloxone obviously, which is blocking the effect where it deals with extinction learning and essentially making the process of stopping taking the opioids easier, quicker and with fewer drug-seeking symptoms. I think one thing I will say on this Myles is and we were a little bit high level in our remarks that we do anticipate that this data will likely be made public by us and by the Yale team over the next few months. So I think that we're holding off a little bit on going into too much detail here but that's certainly data that you will likely see over the next few months shown in more detail.

Myles Minter

Okay, cool. Thanks for the questions.

Andy Kidd

Thanks Myles.

Operator

We'll hear now from Charles Duncan with Cantor Fitzgerald.

Andy Kidd

Charles?

Operator

Mr. Duncan, you might have us on mute.

Unidentified Analyst

Sorry we wish to join the queue at a later time.

Operator

Thank you. We'll move next then to Ram Selvaraju with H.C. Wainwright.

Boobalan Pachaiyappan

Hi. This is Boobalan dialing in for Ram Selvaraju. Can you hear me okay?

Andy Kidd

Yes. We hear you fine.

Boobalan Pachaiyappan

Great. A couple of questions from us. So, firstly, are you planning to evaluate any chronic pain indications in the future, or is that not going to be part of the strategy moving forward?

Andy Kidd

So fibromyalgia obviously being a chronic pain condition will drive that. I think at this point we mentioned, we weren't planning to move forward with DPN. So, yes, I think clearly, if we have positive data, we will move into Phase 3 with fibromyalgia. And I think we will also review at that point in time what other -- based on the data, what other chronic pain indications we think it might make sense to explore in addition. So I think there's a little bit to be determined by the data, but yes, that would still be our plan.

Boobalan Pachaiyappan

Great. Thanks. And then nextly with the Parkinson's disease program, what would you consider a clinical success? And how do you see 458 readout being positioned?

Andy Kidd

Yes. It's -- a question in this study is characterizing the effect on cognitive impairment. And as I mentioned we're doing that with a series of well-validated tablet-based neurocognitive assessments [ph] cover attention, working memory and executive function. It's very hard.

The other point, I should say is that there's only one drug rivastigmine that's approved for Parkinson's dementia and nothing approved for Parkinson's mild cognitive impairment and rivastigmine was approved over 20 years ago with the primary endpoint being an Alzheimer's scale. So I think one could argue the unmet need is pretty significant and it's not specific to one cognitive domain or another. There's really a lot of issues that different patients can experience based on different pattern of cognitive symptoms or different effects from different cognitive symptoms.

So it's not really, I think at this point meaningful to say, we need to see a very specific thing in those six neurocognitive tests. Clearly, we need to see something that's commensurate with an active drug that we think can be clinically meaningful, but I think it's very hard ahead of time to describe exactly all of the different permutations that that could be.

We would need to see a meaningful improvement in cognition, and we've got those six different sales across the different domains to do it. I think in the past what we've said is more if we see something that we think represents a coherent signature of a signal across the endpoint and there's probably multiple options as to what that would be combined with good safety and tolerability, but that would -- and there's multiple permutations of that but that would be a basis for moving forward.

Boobalan Pachaiyappan

Great. Thanks for the detail answer. Yes. That's it from us. Thank you.

Andy Kidd

Great. Thank you.

Operator

[Operator Instructions] And with no other questions at this time, Andy, I'd like to turn things back to you for closing remarks.

Andy Kidd

Thank you operator, and thank you for all the questions. We appreciate your time and attention, and wish you all a very pleasant rest of your day.

Operator

And that does conclude today's conference. Again, we thank you all for your participation and you may now disconnect.

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